'Lean Inventory' Stocks Continue to Outperform the Market

By Kapitall:Do you consider the buying trends of "smart money" investors when comparing stocks? We ran a screen with this idea in mind.We ran a screen on the semiconductor sector for stocks with troubling trends in inventory: growth in quarterly revenue slower than growth in quarterly inventory year-over-year. We also screened for companies with quarterly inventory increasing as a percent of current assets.

By Kapitall:Many tech companies rely on sales as their primary source of profits, so if you're looking at specific tech stocks, a sales analysis should be top on the list. For ideas on how to dig deeper into a company's sales trends, we ran a screen.

By Kapitall:Interested in finding stocks that pay reliable dividends? For ideas on how to start your search, we ran a screen you may find helpful.

Kapitall submits:This list highlights seven tech companies with two very noteworthy trends – they all exhibit accounts receivable and inventory growth in excess of revenue growth. Although there are many possible explanations - good, bad, and neutral - these trends signal that investors should take a closer look.

Inventory swings have always been destabilizing, a point I made strongly in (if I may be so bold) a good book about economics and business.  Here's what the change in inventories did to the economy over the past two years:

By Kapitall:Inventory trends are a very important consideration for retail stocks because their relationship with revenue can give hints on how well or poorly the stores are selling. We ran a screen on large-cap retail stocks for those that are exhibiting negative trends in inventory: growth in inventory outpacing growth in revenue year-over-year, as well as inventory becoming a smaller portion of current assets.

By Kapitall:Looking for momentum ideas? If you're interested in trading with a stock's momentum, here are some ideas to start your stock search.

By Kapitall:How do you analyze a company's sales trends? One idea is to look at their growth in inventory over time, compared to revenue. If revenue is growing faster than inventory, it could be a good sign. We ran a screen on the semiconductor industry for stocks with positive trends in inventory: growth in quarterly revenue outpacing growth in quarterly inventory year-over-year. We also screened for companies with quarterly inventory decreasing as a percent of current assets.